EXCERPT: 'Viral Loop'

Oct. 19, 2009

Page 7 of 12

Instead, the penniless Ponzi used them to justify his swindle. A month and a half after starting, he redeemed his first certificates. When early adopters got back their money plus 50 percent, they spread the word. Like any con man, Ponzi knew that greed was an effective viral mechanism—not that he would have described it that way. The average investment was $100, but many invested far more than that. People mortgaged their homes and cashed in their life savings to get in on the action, while those who redeemed their certificates simply plowed their proceeds back into the company. Eager investors packed the sidewalks outside his office, and Ponzi hired off-duty police to keep order.
Although money was going out to pay back those with certificates, it was coming in even faster. By February 1920, Ponzi had accumulated $5,000; a month later he banked $30,000. He quickened the pace of virality by hiring agents on commission, who spread out across New England to preach Pon-zi's sermon. The more money that came in, the more lavish Ponzi's lifestyle became. He purchased a twenty-room mansion with a swimming pool and a $12,000 automobile with a chauffeur and wore only hand-tailored silk suits. On May 1 he had $420,000, and by July he had amassed millions, all the product of a viral expansion loop, with each investor yielding two, three, or more investors.
It all came to a head in August 1920, when Ponzi was arrested on charges of larceny after an auditor estimated that he owed $7 million yet had less than half that in the bank. Even then he was pulling in $250,000 a day, which would have meant his revenues would have topped $91 million in its first year of operation—almost $1 billion in current dollars—before it crashed and burned.

[ A DIFFERENT KIND OF WORKFORCE ]

Earl Tupper's company would end up surpassing Ponzi at his scheme-iest, and do it legitimately. In late 1949, as a drumbeat of orders came in to Tup-perware headquarters from Stanley Home dealers, he dispatched Victor Col-lamore, a company executive, to Detroit to meet with Wise and Gary McDonald, the salesman who first introduced her to Tupperware. "Just what in the hell are you guys doing to sell the amount of Tupperware you're doing?" Collamore asked. "You're selling more Tupperware than the J. L. Hudson department store by far, and that's the biggest department store in the world."

Impressed by what he heard, Collamore hired Wise to act as a distributor for Tupperware and directed her to build a sales team to cover the entire state of Florida. She jumped at the chance, especially after Stanley founder Frank Stanley Beveridge told her she would never land an executive posi-tion in the company because it was "no place for a woman." In the late 1940s the glass ceiling was knee high. Women made up a third of the na-tion's workforce but only 5 percent of them held professional positions. The majority trudged through low-pay, mostly dead-end jobs—stocking shelves in retail stores or working as cashiers, earning dismal wages as secretaries (as Wise had), teaching school, working man-sized shifts at factories, or simply staying at home.